This could be a year to forget for Cathie Wood. The founder, CEO, and chief investment officer of ARK Invest has had a rough 2021 after a monster 2020. She might be relieved when 2022 comes around.
ARK Invest offers up a daily digest of the trades across its widely followed exchange-traded funds (ETFs). We now know that Wood added to her existing positions in 2U (TWOU -1.42%), Teladoc Health (TDOC -2.48%), and Blade Air Mobility (BLDE 4.86%) on Wednesday. Let's see why these three names -- all trading for less than half of this year's earlier highs -- look attractive in Wood's latest round of buying.
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2U
Online education has never been as important as it is right now, but 2U has been excelling for a long time with its time-tested platform. It provides online graduate programs for universities as well as shorter virtual boot camps for folks seeking professional certifications.
The secret sauce in 2U's model is that it teams up with actual universities and trade schools to make it easier to market its digital curricula. It now has more than 85 partners on that front, including possibly many of your favorite institutions of higher learning.
2U has been surprisingly resilient, and heading into this year, it had rattled off at least nine consecutive years of at least 30% growth. The streak will end this year. 2U's latest guidance calls for 21% to 23% top-line growth for all of 2021. It's still pretty remarkable. Revenue gains of at least 20% for the past 10 years will look good on any growth stock's resume.
The model works. The original partnership model calls for 2U to take a 60% share of the digital revenue from universities and an 80% cut for its boot camps. It's a lot, but 2U is the one investing in developing the curriculum as part of these multiyear deals. It's a low-risk role for the partners. The 2U story would be better if it was profitable, but it's been in the red for more than a decade. No stock is perfect.
Teladoc Health
One of Wood's favorite stocks is Teladoc Health. It has shed more than half of its value in 2021, down 55% for the year and off by 70% since peaking in February. But it continues to be the second largest position across ARK Invest's funds. She's been adding to her position on the way down, and that included adding more Teladoc to four of her ETFs on Wednesday. She now owns 11% of Teladoc's shares outstanding.
As a leader in telehealth -- where folks can visit a doctor, psychiatrist, wellness specialist, and other medical pros without leaving their home -- growth has slowed as the vaccinated feel more comfortable returning to in-office visits. The thing here is that Teladoc was growing briskly even before the COVID-19 crisis. It's not going away now that more people are out in public again. And if anything, a growing number of people prefer these virtual teleconference visits over trekking out to a crowded waiting room.
Teladoc is still upbeat about it future. It expects to generate $2.6 billion in revenue next year, up from a little more than the $2 billion that it's targeting for 2021. It believes it can hit $4 billion by 2024, essentially doubling its business in the next three years. With the omicron variant shattering daily case-count records this week, it's surprising to see Teladoc hitting fresh lows.
Blade Air Mobility
It's probably not fair that Blade Air Mobility hit the market earlier this year primarily as a company that provides on-demand helicopter transport services, basically shuttling the rich and/or famous through traffic gridlock in densely populated cities. Like many 2021 debutantes, Blade Air Mobility stock has now fallen to the single digits.
CEO Rob Wiesenthal was on CNBC's Mad Money last week, again trying to dispel the notion that Blade Air is just a helicopter company. "Urban air mobility," is how Wiesenthal prefers to describe Blade Air's business as it tries to solve the problem of high-friction routes that are time-consuming by car. It's not just whisking celebrities to shows or corporate bigwigs to meetings. It became a major player in human organ transport when it announced that it would be acquiring Trinity Air Medical this summer.
Blade Air Mobility is a small position for ARK Invest, and given its market cap of $600 million, it will probably stay that way. It's a niche player, but it fits the mold of a disruptor that Wood craves -- and revenue has more than doubled over the past year.
